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Prime Minister Dr. Ralph Gonsalves and Opposition Leader Arnhim Eustace (File montage).

KINGSTOWN, St. Vincent – Opposition Leader Arnhim Eustace believes that the Unity Labour Party government has agreed with the International Monetary Fund (IMF) to freeze wages until 2015.

But he told Parliament on Tuesday that Prime Minister Dr. Ralph Gonsalves might be hiding this from the public because it is not good politics.

“I believe that the Prime Minister is very familiar with this document. And I believe that he take out a piece of it, but he don’t want to say so because it is bad politics; but it is not good economics,” Eustace, an economist, said while quoting in Parliament an IMF document entitled “St Vincent and the Grenadines: Options for Expenditure based Fiscal Consolidation”.

“I am drawing to the attention of the public that this document exists. It was asked for by the government and I am looking at the estimates and doing my own interpretation based on the estimates,” Eustace further said.

Gonsalves, who is also Minister of Finance, last year met with unions representing public servants and all but one agreed to wait until June for a review of the country’s finances to see if the government can pay a 3 per cent increase in salary owed since January 2011.

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“I don’t believe for one moment that the three per cent that is owed to the public servants will be paid anytime in 2012, unless we have some sort of economic miracle,” Eustace said, noting that this year’s budget makes no provision for such payments.

The Vincentian economy has declined in each of the three years ending 2010 and projections for last year were that there could be a further decline of 0.4 per cent or growth of up to 0.8 per cent.

“It is foolishness to tell me that maybe by June you can get your 3 per cent,” said Eustace, a former prime minister and minister of finance.

The IMF has proposed that the government freeze wages for established workers for up to three years, Eustace said.

He said it is important that the government discusses the situation openly “because our public servants are not stupid”.

“They are Vincentians, too. A wage freeze [is] better than going home. Sit down frankly with the public service and discuss the issue; and that is all I ask. Point out the issue with relation to fiscal consolidation in the country”

Eustace, however, said that he was not proposing that the government freeze wages.

“I don’t see the need now. I believe that savings can be made but the more we continue, as you (Gonsalves) duck yesterday in this Parliament, the more we are likely to have a situation in this Parliament where that happens. And you will take the full blame for it, too,” he said.

“[Public servants] have a continuing and deep interest in their own wellbeing and they also, as patriots, have an interest in the wellbeing of the country because, if the country is not doing well, they are not going to do well, either,” Eustace said.

“This is an extremely important issue on the point of fiscal consolidation for our country. … We don’t have the resources and we have to find ways to deal with it. Otherwise, come next year, we are in a worse mess,” he further stated.

Eustace said that the country cannot afford the situation to worsen and further stated that the government knows what it has to do.

“I am asking the government of St. Vincent and the Grenadines just to come clean. I am asking the government of St. Vincent and the Grenadines to meet with the public service and work out some kind of arrangement. And I don’t mean the kind of meeting that you just had, where you are telling people they can get their 3 per cent in June when the economy improves.

“The economy cannot get better, in any significant way, by June. Let’s not fool ourselves or try to fool the public. The process of development — and the Prime Minister knows this — … is not an easy one. The task of bringing an economy from four years of negative growth into positive growth is not an easy task and often, it causes pain. But there comes a time…” Eustace said.

Pay the private sector

Meanwhile, Eustace said that he hopes the government can instil increased confidence in the private sector regarding their role in the nation’s economic development.

“But we can’t do that and owe them plenty money. We must also pay what we owe,” Eustace said.

He noted the fiscal measure Gonsalves announced on Monday, including concession on electricity and said he does not have “a difficulty” with them because the local private sector cannot compete with other countries where cost of fuel is concerned.

“The amounts may not look large, but I assume it was done in the context of what VINLEC can afford. And the private sector will determine whether the incentives so granted are sufficient to push them towards further investments in the economy of St. Vincent an the Grenadines,” said Eustace, who noted that some local businesses are at risk of losing their investments because of the failure of CLICO and British American Insurance Co. Ltd.

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